Coal India stake sale: This is who lapped up offer

Coal India Ltd’s (CIL) share sale to institutional investors on Wednesday was subscribed 1.06 times, with the company receiving bids for around Rs 4,200 crore. As per data available on the National Stock Exchange, of the 14.89 crore shares on offer on, non-retail investors put in bids for 15.84 crore, worth Rs 4,213.5 crore. CIL’s share price closed 3.53% lower over the previous close at Rs 266.15 apiece on BSE, which is equivalent to the floor price.

On Tuesday, the government announced its plan for an offer for sale as it aims to raise around Rs 14,000-14,500 crore through dilution of 9% stake in CIL. The government expects to raise around Rs 80,000 crore through disinvestment process in this fiscal, and the stake dilution in CIL is the first big-ticket share sale by the government this year.

The Centre, which holds 78.32% in the state-owned coal miner, is looking to sell 18.62 crore or 3% of equity shares to institutional and retail investors, with an option to sell an additional 37.24 crore or 6% of equity shares through a greenshoe option.

The 3% stake dilution will reduce the government holding to 75.32%. In case, the greenshoe option is also exercised, it will bring down the government holding to 69.32% and would help raise around Rs 9,907 crore. As per the Sebi norm, the minimum public holding in a listed entity should be at least 25%. If fully subscribed, the 3% stake sale would fetch the government around Rs 5,000 crore..

According to a regulatory filing on Tuesday, around 20% of the offer size is reserved for retail investors, who will be allocated shares at a discount of 5% to the cut-off price.

The cut-off price, the lowest price at which the offer shares will be sold, will be determined on the basis of all valid bids received in the non-retail category on October 31, it added.

This means 3.72 crore shares, with an additional option to sell up to 7.44 crore shares, will be available to retail investors at a discount of 5% to the cut-off price. Any unsubscribed portion of the retail category, after allotment, shall be eligible for allocation in the non-retail category in respect of their unalloted bids on October 31 who choose to carry forward their bid to Nov 1.

According to a company official, the discounted price for retail investors is around Rs 253 per share.

Source: DNA Money